ERICOPOLY

Well, I intend to go long. These shorts are going to be squeezed (that's not part of the thesis, it's just fun to think of your detractors being skewered).

The conference call is very fun to read. Good luck to the shorts, i believe you are going to need it: Jesse Pichel - Jefferies: If we take days inventory, days receivable and days payable and basically add them up how quickly can you turn into cash? Deepak Ahuja - CFO: I think the way we look at it is that fundamentally we have zero receivables. We delivered a car within a few days of production and we get full payment, but our supplier payment terms are on average about 45 days. So we tend to deliver and receive money before we have to pay to our suppliers. So, I think from your point of view more focus is working capital usage and our working capital actually doesn't needs of working capital don't increase as we ramp our production, it actually helps us in fact, from a cash flow perspective. Elon Musk - Chairman, Product Architect and CEO: I mean you asked question, I think, which is a good one because the capital needs of the business needs to raise equity or something toward capital as it grows. The effect of return for investors is much lower than if it's the other way round. In our case it is the other way round, but the faster we grow the business the more cash we had available. Jesse Pichel - Jefferies: That's what I thought and why kind of question the Bloomberg article.

He makes a good point about offering to lease the Model S in Europe where the fuel costs are so much higher. So, why is that relevant to Tesla because the cost of operation of the Model S is much less than the cost of operation of any other premium sedan by far. It's going to feel like you have a car for free and particularly in places like Europe. I mean it's like $9, $10 a gallon in Europe. That's it, you could spend a couple of hundred dollars filling up your gas tank, or you can spend some negligible amount recharging your car. So, it really amounts to a huge effective discount on the cost of operation of the car (outage) on the premium finance. But the best way to make that apparent is through a lease. So we're going to be very big on leasing in the future. We just haven't needed to do that, because if there's enough demand for the car, where we just help you buy, you just got to buy the whole thing, but you just can't have leasing.

Just my opinion, but Tesla doesn't have the same product economics issue (that Volt has) any more than Ralph Lauren has with selling clothing, or BMW selling the 7 series. I actually want to buy a Tesla S -- however we are a three car family and we already own a Roadtrek van (for the long excursions), or the Suburban (for shopping and ski trips), and a BMW X5. The BMW X5 will be 10 years old when the Tesla Model X is shipping. So we are waiting for that one (makes more sense with the two kids).

They recognize revenue when the customer actually gets the car delivered to them. There are a lot of them ordered -- so no revenue yet, but soon it's going to come gushing in : Elon Musk - Chairman, Product Architect and CEO: Absolutely. One thing I wanted to reemphasize, if you recall what are the things that I've been really emphatic about and those things are that in 2013 we will produce at least 20,000 units and that our gross margin will exceed 25%. I also say that we'll start deliveries at no later than July. Those are the three things that I said that I was highly confident that we would do. There are other things that are sort of nice to have and you'd like to do and maybe just will happen, but those are the important ones. It's worth noting that we start deliveries in June, so we're ahead of July. I think we are going to exceed 20,000 units next year and exceed 25% gross margin and those are things that I think you should really help me, me and Tesla too.

thesis please :D Alright I'll bite. I can't be sure why other people are shorting Tesla. Here are some of the reasons to short it: #1- They are losing a lot of money. GAAP profits, free cash flow, cash flow from operations... all are negative. Whichever way you cut it, the company is unprofitable. #2- Even if it was profitable, the valuation is a little ridiculous. The market cap is $3B versus less than $300M of equity. #3- Some people like to short ridiculously overhyped IPOs. #4- You could argue that the car industry isn't a great industry to be in (for mass market vehicles; Tesla is very niche so this may not apply). Other countries like Japan massively subsidize their auto industries. #5- Just keep going back to #1. They are massively, massively unprofitable. In YE2011 GAAP losses were $253,922M versus revenues of $204,242M. This is disturbingly unprofitable. I may lose money on this position even if Tesla goes to 0. This could take a while because Tesla has been able to use its stock to raise capital. There is cash flowing in from the capital raises (and a little bit from stock-based compensation) that keeps this company alive. I don't think that Tesla being in danger of breaching its loan covenants on the DOE loan is that deadly because (A) the government is stupid for making the loan in the first place and isn't savvy enough to push this company into bankruptcy and become the bully that owns the whole company and (B) capital raises can keep Tesla afloat. From the Tesla Q2 conference call: As we’ve indicated in the shareholder letter, our expectation based on our plans is that we will achieve pretty close to free cash flow breakeven in Q4. In Q3, we will see burn I would say roughly along the same lines as Q2, may be slightly higher, but considering all of that and given our cash resources we feel pretty comfortable that we have sufficient liquidity to get to profitability next year.

You can charge the model S for free: http://www.engadget.com/2012/09/24/tesla-supercharger/?a_dgi=aolshare_email&a_dgi=aolshare_twitter

Personally I have a little bit of trouble with the way DELL pushes information out to shareholders. I don't trust people who talk like salesmen. http://content.dell.com/us/en/corp/d/videos~en/Documents~Dell_Q2FY13_Results.aspx.aspx Follow that link above and listen to Steve Schuckenbrock. I own shares and I don't really think they are lying, but they verbally communicate in a way that I just don't feel comfortable about. It's the body language and the overly confident tone. I feel like I'm going to drive off the lot with a used car. I'd rather hear the same message from guys with less polish -- they wouldn't look like something isn't quite right. Perhaps it just comes across as unnatural communication because well, it is -- that interview is done in a studio, they've rehearsed the lines... I usually see videos of people fielding questions where they haven't had the time to rehearse the answers.

So what? He didn't make the bulk of his money in his partnership days - he made the bulk of it through Berkshire. Buffett's a pretty smart guy and he must have realized that the easiest path for him to accumulate large amounts of wealth over the long term was not through running his partnership, but taking advantage of the inherent leverage of the insurance business. That depends how you look at it. I'm pretty sure his net worth compounded at the highest annualized pace before he wound up his partnership. He had the "float" of other people's money. Those gains were necessary in order for him to buy his Berkshire shares in the first place -- in that respect this was the most crucial part of his formula. If not Berkshire then what other path? He could have continued to draw other people's money and earned excessive fees as today's hedge fund managers do. Maybe that would have earned him even more money than Berkshire has. Maybe he could be making $2billion a year in hedge fund fees if he were to go that route today. Over the past 10 years he might have raked in $20billion, and if he had been doing this going back 40 years, then I'd say he would have been able to make more than his Berkshire shares have grown. So to answer the question of why more people haven't followed the Berkshire formula, it might be that compensation for talented investors is higher in the hedge fund world. Buffett has been compounding his own money and not making money off of others during the Berkshire days. Hedge fund managers not only compound their own money, but they also make money off of others. And if they aren't that rich to begin with, they soon become so if their own assets are a fraction of the fund size and if the fund size is large then it's just rediculous leverage and scaling.

Right. He needs to put a value on them (prediction is necessary) so they must first be predictable. Therefore... not very volatile as shareholders sleep well sitting on something predictable.

I think this is the one, from two weeks ago: http://i.dell.com/sites/doccontent/corporate/secure/en/Documents/2012_DB_Conf_Transcript_WEB.pdf

I cant know how stock markets will behave but I dont think Japan is a good example, as their market was hugely overvalued prior to the crash. I found some info here: http://www.vectorgrader.com/indicators/price-earnings Their market trades today at P/E of 23.65. Their market is not expensive however relative to GDP, at 0.57x. I take it that's the reason why their investors put up with the high P/E -- and perhaps also the chronically low inflation rate doesn't demand as much earnings yield.

Chanos is saying that Dell has plowed billions into acquisitions to end up with the same level of earnings where it was before (which looking back is basically true) - which implies that from an earnings standpoint its high M&A spend is almost equivalent to huge hidden maintenance capex rather than growth capex as its legacy business gets less and less profitable. If it needed the same level of M&A to maintain the same results forever he might have a point. I am inclined to take the other side of that view, but it's worth thinking about. Chanos has a complicated method of expressing that the PC business' contribution to earnings is declining.

(e.g. For Chanos, the bull case for Dell is, it's a cash flow rich company but if you include their acquisitions as R&D capex, it's burning money. His mental model of why it's a good short sounds correct, but given in opportunity to argue with a long investor who has done his analysis, Chanos would have to flesh out his argument even more. Unfortunately, that's not the ecosystem we live in I don't understand -- when Berkshire employs a strategy of acquisitions Chanos doesn't call it "R&D" or "capex". How is it different when DELL buys a business vs when Berkshire does it?

Eisenhower (Republican) raised the top income tax rate to 91% in the 1950s. Hoover (Republican) raised the top income tax rate from 24% to 63% in 1932. I wonder if the conservatives today would rather have an Eisenhower and his 91% tax, a Hoover with his 63% tax, or Obama who has never proposed any tax even remotely like that?

The bank seems to be deliberately underpromising and overdelivering, no doubt to rebuild credibility. They had a goal of 7.5% Basel III by end of year, and they get to 8.1% in just the first half of the year. Now they are accellerating the cost cuts.

The locals say this house is owned by Charlie: http://www.lotsafunmaps.com/view.php?id=2616 My son's preschool is located close enough that we walk the trail to the beach after dropping him off in the mornings. The trail runs behind the house, crosses a bridge, then turns 90 degrees to the beach. The bench seen in that photo is on the public trail. As mentioned here, the Sea Meadows community was developed by Charlie: http://santabarbaraestatehomes.com/beaches/montecito-real-estate/hammonds-beach-homes/

Now that I got me some Seagram's gin Every body got their cups, but they ain't chipped in Now this type of shit, happens all the time You gotta get yours before I get mine - Snoop Dogg. Obama supporter For you Southern conservatives, the full text has been interpreted to your drawl:

They are certainly very good, however I'm not sure how much of a benefit they got from issuing their shares at a huge premium to book value (it was up to 3x at one point!) -- I think it was quite a bit.

No friggin idea.... They may well be onto something. The CAn. Auto Workers just took a 4 yr. 0% increase. The government of Ontario is freezing all public sector wages, either by legislation or through bargaining. You are right of course, they may be onto something. However it "only" takes an event like Germany leaving the Euro to significantly diminish the chances of deflation in Europe. That would devalue the Euro, there would be printing, and with competitive export prices (weak Euro) there would be a better employment picture.

I was more than 100% net long in FFH most of the time from 2006 through 2009. The credit bubble was unsustainable -- it was nearly certain to collapse under the weight of defaults, thus the CDS bet had that going for it. The only question was when. Does the deflation bet bear the same characteristics? Are nominal price gains something that can go on in perpetuity with a fiat monetary system?

I'm not sure of the year in which the estate was settled, but let's say it was 1976 -- so that makes it a 28 year holding. 15% annualized if a 50 bagger 18% annualized if a 100 bagger

Was he still holding it when it became nearly worthless? I remember seeing an interview of Prem and somebody asked Prem if Ben still held the bag and Prem didn't know. Is there a public record of this?

Well, I'm sure they could come up with longer term numbers than what their funds show, but here is that data. TWEBX kinda sucks. Can't really compare it to an index since it's US and foreign stocks, so I'm looking how it did against its peers. Results don't look so hot. For the past 10 years it has ranked in the bottom 85% of its peers. 15 years - bottom 55%. Hey, they beat 15% and 45%, respectively. Better than....some! :P TBGVX is good. 10 years - top 19%; 15 years - top 1%. That's not what I mean by their historical results. I mean whether or not they are actually purchasing at a significant discount to intrinsic value and selling near intrinsic value, as they profess to be able to do. They surely have a record somewhere of what they bought in 1965, for example, and they can then see the price paid per share and how much intrinsic value those shares turned out to be worth (in hindsight). Then they could release that information to their fundholders saying "look, we are really capable of doing what we claim to be able to do".

Tweedy Browne for example has been around long enough to just release their historical results relative to actual intrinsic value. They should be able to factually state, without any doubt, whether or not their picks are consistently below intrinsic value by a wide margin, whether or not they sell near intrinsic value... And then shove it down the throats of the "efficient markets" academics.